Commentary
With the failures of Silicon Valley Bank (SVB) and Signature Bank, much of the financial community seems to think that the Federal Reserve (Fed) will try to ease financial pressures by softening its counter-inflationary policy posture. The Atlanta Fed’s market probability tracker showed a dramatic downward adjustment in people’s expectations of interest rate hikes.
Perhaps some such concern over the fallout from the failures might even have led the Fed to raise the benchmark federal funds rate by only 0.25 percentage points this last time, much less aggressively than it had previously. Even if this is so, the Fed generally has nonetheless made clear that inflation is not abating sufficiently and that counter-inflationary moves will dominate going forward. Interest rates will continue to rise….